Elon Musk Has Raided 150 People From Apple For Tesla

This is an interesting little story: Elon Musk has been deliberately and specifically hiring people away from Apple to go work with him at Tesla. It's interesting on two levels. The first being the simple business point, that Apple treats its employees extremely well so Musk must be offering something truly extraordinary at Tesla to tempt them away. Also that he's obviously well aware of the levels of talent that exist within Apple. But more important than that for our purposes here is to link this in with the recent settling of that no competitive hiring case that affected the Valley. What Musk is doing with Tesla is exactly what the companies that agreed not to poach from each other were trying to prevent, the bidding up of wages and terms across engineers in the area. And yet as a matter of public policy we want there to be such bidding up. For the simple economic reason that people respond to incentives.

According to a Bloomberg report, electric-vehicle (EV) manufacturer Tesla has reportedly been poaching employees from electronics giant Apple; with nearly 150 employees having reportedly left Apple to join Tesla.

The Bloomberg figures related to ex-Apple employees joining Tesla mark the highest number of employees that Tesla has poached from any other single company thus far. The former Apple employees who have been hired by Tesla include engineers, legal counsels and human resources staffers, among others.

A long time ago, it was written that Apple’s Achilles heel would be retaining talent. To this point, it has not seemed like that has been a major problem for the company. While employees come, and employees go, the consumer has not necessarily seen a bloodbath in terms of the quality of the product on the shelves – which puts employee retention on the back burner. However, it is been recently found that Tesla Motors (NASDAQL:TSLA) and Elon Musk have hired or poached as many as 150 former Apple employees. It is been widely-reported though and dictated by nameless former employees of both companies – that Elon Musk is “enamored” by Apple and comparisons of himself to the founder of the company.

The background to this is that this is the way that labour markets are supposed to work. Indeed Karl Marx actually identified it as the way in which wages increase over time: the capitalists competing with each other for the profits that can be made by employing labour. And it's that which made that agreement among Silicon Valley companies (Apple, Adobe, Google and a number of others) not to poach such a repugnant agreement. As I've mentioned before:

Here’s the background: it was alleged that the major tech firms in Silicon Valley, Google, Apple, Intel and Adobe (Facebook was an admirable holdout from the scheme and several other smaller firms settled earlier) conspired among themselves to hold down the pay of their engineers. OK, so the geeks and the nerds of the valley are some of the best paid people on the planet so it’s not all that difficult to with hold sympathy from them. The companies did this by insisting that they would not recruit or poach employees from each other.

Unfortunately, as even Karl Marx noted, the way in which the wages for the workers rise is by employees being able to bargain with employers. Most obviously by threatening to go and work for someone else offering more cash for their labour. Agreements not to hire from other companies means, obviously, that this tactic isn’t open to the worker. It’s also what Marx called monopoly capitalism (although we would call it monopsonist capitalism these days) and it’s very much something that we don’t want to happen. Partly because the entire point of this economy thing is to improve the life of the average guy, the worker, but also because the price of labour is an important signal in our economy. If wages rose for engineers then more people would be attracted to that calling. And given how profitable the technology business is these days that would be a good thing: another name for labour moving to a higher productivity use is “making us all richer”.

This applies to the wider world as well, not just that of those engineers. If engineers are being poached from one tech company to another with promises of better pay then quite obviously the pay of all engineers is going to rise. Either because they get poached with that better pay or because their current employers raise their pay in order to keep them. And this will of course drift down to the lower levels as well. But it's not just engineers that will be affected. The new, higher, pay for engineers will tempt some from other fields into this one. This will then raise wages in those other fields and so on right throughout the entire economy. We end up then with two desirable things. Firstly, we end up with our skilled labour where employers think they can add most value. This makes the entire society richer, as moving any productive asset from a lower to a higher valued use does. Secondly, the ripple effects of this will raise wages throughout the entire economy. OK, 150 people moving from Apple to Tesla isn't going to have a measurable effect but we can be sure that it is there.

We're thus absolutely delighted that Musk is poaching from Apple for Tesla (although Apple might not be all that happy). And we're similarly delighted that that no poach agreement is now dead as it would have stopped this beneficial practice from happening. And that is also why that no poach agreement was and should have been illegal and also why it was so punished.